How big is too big?

Jaybo10

Hello all,

I would like your opinions please. We are currently saving for a deposit with an aim to have a £50k deposit plus about £10-15k for for stamp duty, fees, moving cost etc etc.

We have a combined income of £77K

Now, are we crazy to be looking at applying for a mortgage of up to £300,000 (ideally lower but London is pricey)? Is that too much of our income to be spending on mortgage payments alone? What percentage of take home pay is usually spent on mortgage repayments in London..

your advice and opinions are welcome :beer:

Thrugelmir

How much you are comfortable borrowing depends on how lavish your lifestyle is.

hcb42

How much are you saving and paying in rent at mo? Compare that to estimated mortgage payments to see of you are comfortable

Personally, we took out £186k in 2006 on sal approx£85k combined and I would not want any higher although our term was 20 yrs

Dave_Ham

Hi there,

I think this is about average in terms of income to mortgage.

Assuming that you are quite young your income should increase throughout the term of the mortgage (and yes so do costs/family etc.) but this is achievable.

The banks will lend this sort of figure and given the state of lending at the moment, this should demonstrate it is affordable..

Budgeting will be key, especially in certain parts of London if you bought anything leasehold be mindful of additional service charges etc.

Good luck

DannyboyMidlands

A £300k mortgage on that salary sounds insane to me. What if one of you loses your job or suffers some other misfortune? What happens if interest rates rise? Or you have kids? Or house prices fall?

opinions4u

I wouldn't.

But many do.

paulmapp8306

4x income doesnt seem that high to me in truth, especially if your young.

Having said that I earn half your income (wifes going to give up work to move - hopefully fond something else but its min wage stuff), and am borrowing less than 1/3 of that figure (deposit of £22400, borrowing 89600 - house price £112k), and the outgoing figures, even at 3.8% mortgage look a little scarey. Thats partly because of how we live now - I know we can cut lots and will need to trim other stuff, and I know I can handle interest rate rises of a few % as well. im also married with 2 kids so have the extra outgoings of a family.

Still - 4x is within what banks will lend (if they lend at all) and whether your confortable with the payments is really down to you and your budget. Just make sure you can handle some interest rate rises.

shop-to-drop

How old are you?

The_J

I thought this topic was about something else. Disappointed.

Less than 4 times salary is comfortably affordable if you aren't an idiot.

Angry_Bear

Try here: http://www.makesenseofcards.com/soacalc.html

Be as honest as you can, and overestimate how much you spend rather than underestimating. Try a few different mortgage values and check how you would fare if the interest rates went up a couple of percent - will you still be able to afford holidays, savings, pensions etc?. How much you can realistically afford depends much more on your lifestyle than your salary imho.

paulmapp8306

Indeed - and actually the more you earm, so the more you borrow, the higher the "x" your sallary you can afford.

What i mean, borrowing £100k on a £25k income is the same percentage as borrowing £300k on £75k wage - BUT, what you have left - while the same % of earnings - is more money. Food/Fuel/Utilities etc cost the same for everyone, so is a higher % of whats less for lower earners.